Rocky Mountain Dealerships Inc. (TSX:RME) Announces Record Second Quarter Sales for the Period ended June 30, 2009



    
    -   Second quarter revenue increased 65% year over year to $155.1 million

    -   Second quarter net earnings increased 43% year over year to
        $3.8 million

    -   Declares quarterly cash dividend of $0.045 per share
    

    CALGARY, AB, Aug. 11 /CNW/ - Rocky Mountain Dealerships Inc. ("Rocky
Mountain" or the "Company") (TSX: RME), a leading Canadian network of full
service agricultural and construction equipment dealerships, today reported
financial results for the periods ended June 30, 2009.
    For the fiscal 2009 second quarter, net sales increased 64.5% to $155.1
million, compared to net sales of $94.3 million for the second quarter of
fiscal 2008. This growth in revenue was due to improved sales from all three
of the Company's primary revenue sources. New equipment sales were $90.6
million in the second quarter of fiscal 2009 compared to $61.7 million in the
prior year period. Used equipment sales were $38.8 million in the second
quarter of 2009, up 188% compared to $13.5 million in the second quarter of
fiscal 2008. Revenue generated from product support increased to $24.4 million
in the second quarter of fiscal 2009 compared to $16.8 million in the second
quarter of fiscal 2008.
    Gross profit for the fiscal 2009 second quarter increased 35% to $21.8
million, compared to $16.1 million in the second quarter of the prior year.
The Company's gross profit margin was 14% in the fiscal 2009 second quarter
versus 17.1% in the second quarter of the prior year. The decrease in gross
profit margin was due primarily to a higher percentage of agriculture sales
that requires less product support and some lower margin highly competitive
sales. In addition, during the first six months of 2009 the Company maintained
a strong focus on the reduction of aged construction equipment inventory which
put pressure on the margins.
    Selling, general and administrative expenses improved to 8.6% of sales,
in the fiscal 2009 second quarter versus 10.3% of sales, in the second quarter
of the prior year. This 170 basis point improvement was due to the Company's
ability to achieve the benefits of economies of scale following acquisitions
completed in 2008 and 2009 allowing expenses to be allocated over a larger
group of dealerships. In addition, synergies obtained through systems
integration and cost cutting measures positively impacted the Company's
results.
    Operating income in the second quarter fiscal 2009 increased to $3.8
million from $2.7 million as a result of the increased sales and reduction in
operating expenses over the period. The Company increased earnings 41%
notwithstanding the reduction in gross profit as management continued to focus
on reducing aged construction equipment inventory.
    For the second quarter of fiscal 2009, EBITDA was $7.2 million compared
to $6.6 million in the second quarter of fiscal 2008. EBITDA was negatively
impacted by the reduction in both the rental and leasing depreciation, of
approximately $1.5 million, as a result of management's commitment to reducing
the size of the rental and lease fleet over the next few years. The impact
from deprecation was offset by the increase in net earnings of approximately
$1.1 million over the quarter.
    Net income for the second quarter of fiscal 2009 was $3.8 million, or
$0.28 per share, compared to net income of $2.7 million, or $0.21 per basic
share, for the second quarter of fiscal 2008, which is an increase of
approximately 33%.

    Cash Flow & Liquidity

    The Company ended the second quarter fiscal 2009 in a very solid
financial position. The Company's net debt to EBITDA ratio was 1.27, which is
within the Company's goal of 1.0x - 1.5x. Working capital at the end of the
second quarter fiscal 2009 was $46.9 million. Inventory as of June 30, 2009,
was $215.2 million compared to $207.5 million at the end of fiscal 2008. The
current inventory reflects increases in new agricultural and parts inventory
as a result of increased demand in that segment of the market. New and used
construction inventory was down from the end of fiscal 2008.

    Quarterly Cash Dividend

    The Company announces that the Board of Directors of Rocky Mountain
declared a dividend of $0.045 per common share on the Company's outstanding
common shares. The common share dividend is payable on September 30, 2009, to
shareholders of record at close of business on August 31, 2009.
    This dividend is designated by Rocky Mountain to be an eligible dividend
for purpose of the Income Tax Act (Canada) and any similar provincial or
territorial legislation. An enhanced dividend tax credit applies to eligible
dividends paid to Canadian residents.

    Conference Call

    The Company will host a conference call to discuss their second quarter
and full year results on Tuesday, August 11, 2009, at 9:00 am MT. Investors
interested in participating in the live call can dial 1-800-590-1508. A
telephone replay will be available approximately one hour after the call
concludes and will be available through August 26, 2009, by dialing
1-416-640-1917 or 1-877-289-8525 and entering the passcode: 21305121 followed
by the pound sign. A live webcast of the conference call will be accessible on
Rocky Mountain's website at www.rockymtn.com.
    Rocky Mountain announces that it has retained the services of Renmark
Financial Communications Inc. ("Renmark") to supply investor communications
services.
    "We are pleased to announce that we have selected Renmark to reinforce
Rocky Mountain's profile in the financial community to enhance the visibility
of our portfolio. We choose Renmark because its standards and methodologies
fit best with the message we wish to communicate to the investing public"
noted Matt Campbell, Chairman and CEO.
    Renmark does not have any interest, directly or indirectly, in Rocky
Mountain or its securities, or any rights or intent to acquire such interest.

    About Rocky Mountain

    Rocky Mountain represents one of Canada's largest agriculture and
construction equipment dealerships with a total of 22 dealership branches
throughout Alberta, Saskatchewan and Manitoba. Rocky Mountain sells, rents and
leases new and used construction and agriculture equipment, including the Case
Construction and Case IH Agriculture brands, as well as offering product
support and finance and insurance products to its customers.

    
    Income Statements (Unaudited)
    -------------------------------------------------------------------------
                       Three Months  Three Months   Six Months    Six Months
                           Ended         Ended         Ended         Ended
                          June 30,      June 30,      June 30,      June 30,
                            2009          2008          2009          2008
                             $             $             $             $
                       ------------------------------------------------------
    SALES
      New units             90,624        61,692       138,108       103,316
      Used units            38,756        13,470        77,978        26,040
      Product support       24,424        16,828        43,477        30,500
      Finance and
       insurance               580           759           876         1,186
      Rental and leases        743         1,501         1,838         2,922
                       ------------------------------------------------------
                           155,127        94,250       262,277       163,964

    COST OF SALES
     (including
     amortization of
     $366 and $842 for
     the three and six
     months ended) (2008 -
     $1,275 and $2,317)
     (Note 10)             133,352        78,110       224,380       135,190
                       ------------------------------------------------------

    GROSS PROFIT            21,775        16,140        37,897        28,774
                       ------------------------------------------------------

    EXPENSES
      Selling and
       administrative       13,303         9,760        25,824        18,843
      Interest on
       short-term debt       1,669         1,065         3,105         2,147
      Interest on
       long-term debt          270           328           547           707
      Amortization of
       intangible
       assets (Note 9)           -           758             -         1,516
      Amortization of
       property, plant
       and equipment           707           396         1,360           785
                       ------------------------------------------------------
                            15,949        12,307        30,836        23,998
                       ------------------------------------------------------
    EARNINGS BEFORE
     INCOME TAXES            5,826         3,833         7,061         4,776
                       ------------------------------------------------------

    PROVISION FOR
     (RECOVERY OF)
     INCOME TAXES
      Current                2,048         1,600         2,554         2,166
      Future                   (51)         (449)          (50)         (660)
                       ------------------------------------------------------
                             1,997         1,151         2,504         1,506
                       ------------------------------------------------------
    NET EARNINGS AND
     COMPREHENSIVE
     INCOME                  3,829         2,682         4,557         3,270

    (DEFICIT) RETAINED
     EARNINGS, BEGINNING
     OF PERIOD             (88,983)          916       (89,116)          328

    REDUCTION OF STATED
     CAPITAL (Note 16a)     89,116             -        89,116             -

    DIVIDENDS                 (624)         (565)       (1,219)         (565)
                       ------------------------------------------------------

    RETAINED EARNINGS,
     END OF PERIOD           3,338         3,033         3,338         3,033
                       ------------------------------------------------------
                       ------------------------------------------------------

    Earnings per share
     (Note 17)
      Basic                  $0.28         $0.21         $0.34         $0.26
                       ------------------------------------------------------
                       ------------------------------------------------------
      Diluted                $0.28         $0.21         $0.34         $0.26
                       ------------------------------------------------------
                       ------------------------------------------------------



    Balance Sheets (Unaudited)
    -------------------------------------------------------------------------
                                                      June 30,   December 31,
                                                        2009         2008
                                                         $            $
                                                   --------------------------
    ASSETS
    CURRENT
      Cash                                                 413           493
      Accounts receivable and other (Notes 6 and 19)    29,200        40,614
      Inventory (Note 7)                               215,214       207,467
      Prepaid expenses                                     625           392
                                                   --------------------------
                                                       245,452       248,966

    Property, plant and equipment (Note 10)             19,661        21,458
    Intangible assets (Note 9)                               -             -
    Goodwill and other (Notes 5 and 8)                   3,886             -
                                                   --------------------------
                                                       268,999       270,424
                                                   --------------------------
                                                   --------------------------

    LIABILITIES
    CURRENT
      Bank indebtedness (Note 11)                        8,233         5,223
      Accounts payable and accrued liabilities
       (Note 12)                                        39,052        29,973
      Floor plan payable (Note 13)                     137,298       150,449
      Deferred revenue                                   3,890         9,437
      Due to related parties (Note 19)                   1,273         3,691
      Current portion of long-term debt (Note 14)        8,461         5,910
      Current portion of obligations under capital
       lease                                               332           300
                                                   --------------------------
                                                       198,539       204,983

    Long-term debt (Note 14)                            15,833        17,803
    Obligations under capital lease                        430           343
    Future income taxes                                  1,199         1,126
                                                   --------------------------
                                                       216,001       224,255
                                                   --------------------------
    CONTINGENCY AND GUARANTEE (Note 15)

    COMMITMENTS (Note 18)

    SHAREHOLDERS' EQUITY
    Common shares (Note 16a)                            47,501       133,879
    Contributed surplus (Note 16d)                       2,159         1,406
    Retained earnings (deficit) (Note 16a)               3,338       (89,116)
                                                   --------------------------
                                                        52,998        46,169
                                                   --------------------------
                                                       268,999       270,424
                                                   --------------------------
                                                   --------------------------



    Reconciliation of Net Income to EBITDA

                          3 Months      3 Months      6 Months      6 Months
                           ended         ended         ended         ended
                          June 30,      June 30,      June 30,      June 30,
                            2009          2008          2009          2008
                        (unaudited)   (unaudited)   (unaudited)   (unaudited)
    EBITDA                   $             $             $             $

    Net Earnings             3,829         2,682         4,577         3,270
    Long-term interest         270           328           547           707
    Depreciation               707           396         1,360           785
    Amortization of
     intangibles                 -           758             -         1,516
    Income taxes             1,997         1,150         2,504         1,506
    Rental depreciation        206           624           307         1,065
    Lease depreciation         160           652           535         1,251
                       ------------------------------------------------------
    EBITDA                   7,169         6,590         9,830        10,100
                       ------------------------------------------------------
                       ------------------------------------------------------

    Overhead Absorption         89%           78%           82%           72%
    

    %SEDAR: 00026106E




For further information:

For further information: M.C. (Matt) Campbell, Chairman and Chief
Executive Officer; Brian Taschuk, Chief Operating Officer; or Garrett Ganden,
Chief Financial Officer, 828 - 46th Avenue S.E., Calgary, Alberta, T2G 2A6,
Telephone: (403) 243-8600, Fax (403) 243-2264


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